Paul R. ELLIS, Peggy Ann Ellis, on their own and on behalf of all others similarly situated, Plaintiffs-Appellants, v. GENERAL MOTORS ACCEPTANCE CORPORATION, d.b.a. General Motors Acceptance Corporation, Defendant-Appellee.
No. 97-6963.
United States Court of Appeals, Eleventh Circuit.
Nov. 13, 1998.
John M. Johnson, Lightfoot, Franklin & White, LLC, Birmingham, AL, Richard C. Godfrey, Scott W. Fowkes, Kirkland & Ellis, Chicago, IL, for Defendants-Appellees.
Before ANDERSON and BARKETT, Circuit Judges, and HILL, Senior Circuit Judge.
BARKETT, Circuit Judge:
Plaintiffs Paul and Peggy Ellis (“Ellises“) appeal the dismissal of their suit against the General Motors Acceptance Corporation (“GMAC“) alleging violations of the Truth in Lending Act,
Background
The Ellises’ claim derives from their purchase of a 1993 Saturn SL-2 from Royal Oldsmobile (“Royal“) on May 22, 1995. At the same time that they bought the car, the Ellises purchased an extended warranty for an additional $1,195. They financed the car and warranty through a Retail Installment Contract (“RIC“) and the loan was assigned to GMAC simultaneously with the contract‘s execution. In the section itemizing the amount financed, the RIC listed $1,195 as being paid to “Mechanic” for the extended warranty. The Ellises allege that this listed payment constituted misrepresentation because substantially less than $1,195 was paid to this third party. They claim that only a small portion of this amount was paid to “Mechanic” and that Royal retained the rest. The Ellises brought suit against GMAC on January 14, 1997, eighteen months after purchasing the car and warranty, and the district court subsequently granted GMAC‘s motion to dismiss the suit for failure to state a claim. See
The Ellises recognize that, under TILA, they had only one year from the time they purchased the car and warranty to bring an action.1 They argue, however, that because they were prevented from learning that the total amount paid by Royal to Mechanic was misrepresented on the disclosure document, equitable tolling applies to suspend the statute of limitations. The Ellises further argue that, notwithstanding the language of
We review dismissals pursuant to
Discussion
1. Statute of Limitations
Because the district court determined that TILA‘s statute of limitations is jurisdictional and that its expiration deprived the court of subject matter jurisdiction, we must first address this threshold issue. When Congress enacts statutes creating public rights or benefits, it can impose time limits on their availability. These time limits can either completely extinguish the right or simply bar the remedy for enforcement. In the former case, jurisdiction does not exist because the cause of action has been totally extinguished. In the latter case, the court continues to have jurisdiction and has the discretion to consider particular circumstances affecting the ability of a party seeking review to comply with the time limits, which can be tolled when principles of equity render their rigid application unfair. See Zipes v. Trans World Airlines, Inc., 455 U.S. 385, 398, 102 S.Ct. 1127, 71 L.Ed.2d 234 (1982); Holmberg v. Armbrecht, 327 U.S. 392, 395-96, 66 S.Ct. 582, 90 L.Ed. 743 (1946).
“Equitable tolling” is the doctrine under which plaintiffs may sue after the statutory time period has expired if they have been prevented from doing so due to inequitable circumstances. See Bailey v. Glover, 88 U.S. (21 Wall.) 342, 347, 22 L.Ed. 636 (1874) (where a party injured by another‘s fraudulent conduct “remains in ignorance of it without any fault or want of diligence or care on his part, the bar of the statute does not begin to run until the fraud is discovered ...“). See also Osterneck v. E.T. Barwick Indus., 825 F.2d 1521, 1535 (11th Cir.1987), aff‘d, Osterneck v. Ernst & Whinney, 489 U.S. 169, 109 S.Ct. 987, 103 L.Ed.2d 146 (1989) (if third party is in privity, or a principal-agent relationship with the defendant exists, defendant‘s approval of the concealment may be sufficient to toll the statute). Unless Congress states otherwise, equitable tolling should be read into every federal statute of limitations. Holmberg, 327 U.S. at 394-96, 66 S.Ct. 582.
In this case, the district court concluded that TILA was a jurisdictional statute and that the Ellises’ claim was therefore timebarred. The Ellises maintain that
The issue of whether TILA is subject to equitable tolling is one of first impression in this circuit. Every other circuit that has considered the issue has held that TILA is subject to equitable tolling. See Ramadan v. Chase Manhattan Corp., 156 F.3d 499 (3rd Cir.1998) (under facts virtually identical to those here, court found
The Hill court disagreed, recognizing that, while equitable tolling is typically read into federal statutes of limitation, it cannot apply in the face of contrary congressional intent. Id. “[T]he basic inquiry is whether congressional purpose is effectuated by tolling the statute of limitations in given circumstances.” Burnett v. New York Central R.R. Co., 380 U.S. 424, 427, 85 S.Ct. 1050, 13 L.Ed.2d 941 (1965). To determine whether equitable tolling applies, courts “examine the purposes and policies underlying the limitation provision, the Act itself, and the remedial scheme developed for the enforcement of the ... Act.” Id.
PMPA has a very specific purpose—protecting franchisees from wrongful termination of their franchises.3 It begins to run from the time of a specific event of which the claimant would have certain knowledge, i.e., the termination or nonrenewal of his/her franchise. Although Congress wished to shield franchisees from unfair business practices by giving them the right of first refusal on the sale of their leased property, it clearly did not intend to create an indefinite right of action in the event the franchiser decides at a later date to part with the property at a lower price. See Hill, 825 F.2d at 334 (noting that when Congress enacted PMPA, it was aware of abusive practices by some oil franchisers yet deliberately chose a short statute of limitations). In light of the statute‘s stated purpose and language, the Hill court concluded that PMPA represents a narrow exception to the general rule that equitable tolling applies to all federal statutes of limitation. See id. at 334-35.
In this case, we examine TILA, a consumer protection statute which, though possessing a limitations period similar to PMPA, is remedial in nature and therefore must be construed liberally in order to best serve Congress’ intent. See McGowan v. King, Inc., 569 F.2d 845, 848 (5th Cir. Mar.15, 1978).4 The section of TILA addressing Congressional findings and the statute‘s declaration of purpose states in relevant part:
(a) Informed use of credit
The Congress finds that economic stabilization would be enhanced and the competition among the various financial institutions and other firms ... would be strengthened by the informed use of con-
sumer credit. The informed use of credit results from an awareness of the cost thereof by consumers. It is the purpose of this subchapter to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit, and to protect the consumer against inaccurate and unfair credit billing and credit card practices.
Despite TILA‘s clearly remedial purpose, if we were to read its time limit literally, consumers whose cause of action was fraudulently concealed from them until after a year had passed could not pursue a cause of action under TILA. That would lead to the anomalous result that a statute designed to remediate the effects of fraud would instead reward those perpetrators who concealed their fraud long enough to time-bar their victims’ remedy. We cannot believe this was Congress’ intent. Rather, in these circumstances we apply the general rule that equitable tolling applies to all federal statutes unless the statute states otherwise. Holmberg, 327 U.S. at 394-95, 66 S.Ct. 582. We therefore agree with the Third, Sixth, and Ninth Circuits that the statute of limitations in TILA is subject to equitable tolling. Consequently, the district court erred in dismissing the Ellises’ claim for lack of jurisdiction.
2. Assignee Liability
Although we find that TILA is subject to equitable tolling, thus giving the district court jurisdiction, we need not reach the question of whether equitable tolling applies to the facts of this case because we conclude that, as an assignee, GMAC is not liable for the alleged TILA violations. The Act applies to every consumer credit contract, including those between buyers and sellers as well as those between buyers and third-party financing agents including mortgage brokers, credit card companies and the like. In this lawsuit, the seller, Royal, was not sued. Thus, we are concerned only with whether GMAC, the assignee of the contract between Royal and the Ellises, is liable under the statute.
TILA has specifically addressed the liability of assignees under the Act and provides that:
[e]xcept as otherwise specifically provided in this subchapter, any civil action for a violation of this subchapter or proceeding ... which may be brought against a creditor may be maintained against any assignee of such creditor only if the violation for which such action or proceeding is brought is apparent on the face of the disclosure statement, except where the assignment was involuntary.... [A] violation apparent on the face of the disclosure statement includes but is not limited to (1) a disclosure which can be determined to be incomplete or inaccurate from the face of the disclosure statement or other documents assigned, or (2) a disclosure which does not use the terms required to be used by this subchapter.
NOTICE: ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS OR SERVICES OBTAINED PURSUANT HERETO OR WITH THE PROCEEDS HEREOF. RECOVERY OF THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER.
GMAC was clearly a “holder” of the Ellises’ credit contract, which would seem to suggest that a TILA cause of action could lie against GMAC. GMAC contends, however, that the holder notice language appears in the contract only because it is required by the FTC and therefore is subordinate to the statutory limitation of liability set forth in
While it is certainly true that parties can waive statutory protections and assume liabilities not required by law,6 we cannot conclude that GMAC has done so here. The only evidence of GMAC‘s purported intent to relinquish TILA‘s protections is the language that the FTC mandates be inserted into every consumer credit contract. See
Thus, the language in the contract required by the FTC regulation standing alone does not suffice to subject GMAC to liability. Although GMAC could contract, as the Ellises suggest, to assume greater liability than the statute requires, there is no evidence in this case to suggest or indicate that the insertion of the regulatory language into the contract resulted from bargaining or agreement by the parties to reflect such a voluntary and intentional assumption of liability. Accordingly, we conclude that under
The Ellises maintain, nonetheless, that the misrepresentation of the warranty cost was sufficiently “apparent on the face” of the disclosure statement to warrant liability. We find this contention equally unconvincing. The Ellises argue that since GMAC issued the checks and credits to “Mechanic” in payment for the warranty and that related loan documents reveal the true cost of the warranty as well as the amounts paid to the parties, the discrepancy between the amount supposedly paid to “Mechanic” and the amount actually paid by GMAC reflected a violation apparent on the face of the documents. Under the Ellises’ own argument, however, we would need to resort to evidence or documents extraneous to the disclosure statement. This the plain language of the statute forbids us to do. As the Seventh Circuit noted, such an interpretation of TILA would: “impose a duty of inquiry on financial institutions that serve as assignees. Yet this is the very kind of duty that the statute precludes, by limiting the required inquiry to defects that can be ascertained from the face
For the foregoing reasons, we hold that the statute of limitations set forth in TILA,
HILL, Senior Circuit Judge, specially concurring:
I concur in the judgment of the panel in that it affirms the dismissal of the complaint by the district court. I write specially for the following reasons.
The district court dismissed the complaint on two grounds: (1) that it was time-barred by the jurisdictional limitation period of Section 1640(e); and, (2) that it failed to state a claim of assignee liability under Section 1641(a). If the liability of the assignee issue can be affirmed, in my view, we need not reach the jurisdiction question.
Let us assume, however, that we must decide the jurisdictional issue of equitable tolling. In my opinion, we are bound by the precedential authority of Hill v. Texaco, Inc., 825 F.2d 333 (1987), unless and until told otherwise by an en banc panel of this circuit or the Supreme Court of the United States. Unlike the panel‘s opinion, I do not read Hill to be “inapposite” to the circumstances here.
Furthermore, I adhere to the reasoning of Hardin v. City Title & Escrow Co., 797 F.2d 1037, 1039-40 & n. 4 (D.C.Cir.1986), premised upon an analysis of congressional intent surrounding a 1980 amendment to the TILA, that Section 1640(e) is jurisdictional in nature and cannot be equitably tolled. In short, the TILA is a statute of repose.
I would affirm on the basis of the judgment of the district court. I think it got it right all the way.